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Activision (ATVI) to Report Q3 Earnings: What's in Store?

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Activision Blizzard is set to report third-quarter 2021 results on Nov 2.

For the to-be-reported quarter, the company expects non-GAAP revenues of $1.97 billion and earnings of 75 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $1.88 billion, indicating an increase of 6.2% from the year-ago quarter’s reported figure.

The consensus mark for third-quarter earnings has stayed at 71 cents per share in the past 30 days.

The company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 13.7%.
 

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc price-eps-surprise | Activision Blizzard, Inc Quote

 

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

Activision is expected to have benefited from the popularity of its franchises, including Call of Duty ("COD"), Overwatch, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga, in the to-be-reported quarter.

The expanding user bases of COD, Hearthstone, World of Warcraft and King’s franchises are expected to have boosted in-games spending, thereby driving net bookings and the top line in the to-be reported quarter.

Activision expects net bookings of $1.85 billion for the third quarter of 2021.

Per Sensor Tower data, Candy Crush Saga was the fifth top-grossing mobile game globally in September, an improvement from the eighth position in August and seventh position in July.

Strong video game spending in the quarter is expected to have benefited Activision. Per Venturebeat, which cited NPD data, consumer spending on video games increased 10%, 7% and 3% year over year in July, August and September, respectively.

However, lack of major game releases is expected to have hurt active user growth, thereby affecting the top line in the to-be reported quarter.

Markedly, Activision launched Diablo II: Resurrected on Sep 23, which is not expected to have a major impact on user engagement, given the short span of time it was available in the third-quarter.

Intensifying competition from Chinese game publishers like Tencent (TCEHY - Free Report) and NetEase (NTES - Free Report) is expected to have hurt Activision’s top-line growth in the third quarter. Tencent’s Honor of Kings and PUBG Mobile, and NetEase’s Harry Potter: Magic Awakened were the second, third and fourth top-grossing mobile games in September, per Sensor Tower data.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Activision has an Earnings ESP of -3.48% and carries a Zacks Rank #3, currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release:

Apple (AAPL - Free Report) has an Earnings ESP of +3.96% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.


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